Member Info for Harmonica

Optimus, why get rid of the debt pile? What if the bulk if the debt has a cost of capital that is lower than the cost of capital of shares? If BP were to borrow more later, it would almost certainly be at a higher cost, as rates are way higher than for many years.

A rights issue is a very legitimate way to raise new capital for investment by an established business, which BP PLC clearly is.

An alternative is raising said capital via debt issues.

Why should I not make reference to rights issues as an alternative if capital is not raise via debt issues?

Do you understand them?

I am not keen on BP drowning in debt.

I see no evidence whatsoever that it is.

Remember that some of it will be paying a very low rate of interest due to being taken out when QE drove interest rates down towards zero.

The alternative is ro raise capital via eights issues which would dilute the holdings of BP shareholders.

Debt can be great as it raises investment capital and gears the business, making ir bigger without selling more share capital.

Why are you so keen to Rob BP of its lifeblood?

I understand that if, IF, it can be sold for cash and that cash can be used on projects with a higher return then great!

They can be cancelled at any time. Whilst sitting in treasury they cost nothing to BP.

No PrimeTime 51, there are lots of ifs and buts.

Why, Stracathro?

BP would need to issue new shares to reward those on its employee share schemes.

More sensible to buy and hold and use to deal with these schemes and then cancel the rest when the time is right.

It is where it is due to the perceived increase in the possibility of a takeover

Primetime51, why do you believe that debt levels are too high? They provide income for the business without diluting our shareholding such as by a rughts issue.

1. Armani, when a company does NOT have to sell is the best time to sell! Why? Not a motivated seller, so can sell for the highest price. Perhaps BP sees better returns elsewhere?

The BP share Price is more likely correlated with the price of crude oil, nitnthe FTSE100 index.

Yes, a very wild idea, Theaky!

What does BP know about rare earth minerals?

The wait re Rosneft may be close to interminable!

Actually, Rosneft OWES BPplc money in divide not received yet.

The Nikkei 225 is up over 1% overnight.

A good trading day expected on the FTSE-100¡

Hi Lending,

Apart from an overdraft, lending cannot be withdrawn at the drop of a hat! The issue with debt capital is that interest must be repaid, per the agreement, irrespective of whether the business has been profitable or not. This is unlike dividend payments which can be lowered or stopped at the whim of the Board of Directors.

Debt is good. Leverages the operating capacity of the business without diluting our shareholding.

Does that depend what you mean by "receive"?

Whilst no cash hits any BP bank account, is the money not being set aside in Russia?

I have no idea if £5bn would have the effect of bumping up the BP share Price from £3.80 to £5.00.

But, even if it did that, how would the purchaser book that gain? It cannot sell £5bn in one go back into the market. Any attempt to offload would collapse the share process and the 30% gain would be gone.

Yes, the downside is that it would cost many millions or billions in capital. The question is would the investing company have to forgo other projects with a better return that it would control?

The price offered would be adjusted to take into account the penalties still outstanding on the Deepwater Horizon incident.